Estate planning for blended families

Blended families face unique estate planning challenges. As divorce and second marriages become increasingly common, more people find themselves raising children who are not biologically their own. Estate planning for blended families should address this unique situation.

In the most basic sense, a blended family is one in which a couple has children from a prior relationship. While the specifics may vary, the challenge is largely the same: there is the possibility that after one spouse dies, the surviving spouse could reduce or remove any provisions for the deceased spouse’s children, leaving them with no inheritance.

A carefully drafted estate plan can ensure that the deceased spouse’s children are protected and provided with assets and freedom after the death of their parent.

When designing and drafting an estate plan, the assumption should be made that the surviving spouse may remarry. With that in mind, provisions can be made to ensure the financial legacy and independence for one’s children.

Designating an independent fiduciary can also ensure that the children of the deceased spouse have sufficient assets. An independent fiduciary can protect the children’s interests without any risk of self-dealing. Furthermore, an oversight by an independent fiduciary minimizes the possibility of conflict between children and stepparents.

Typically, a simple last will and testament or even a revocable living trust without any additional provisions will be insufficient to address the intricate needs of a modern blended family. When the first spouse dies, the surviving spouse remains free to modify the terms of the estate plan to the disadvantage of the children of the deceased spouse.

A correctly designed estate plan can protect the interests of the children of both parents, regardless of which spouse dies first. A common strategy is to create a trust that leaves the assets to the surviving spouse during the spouse’s lifetime, but then passes the remaining assets to the children of the deceased spouse. Another option creates a division of the estate into two upon the death of the first spouse, with half of the estate being protected for the children of the deceased spouse, but with the surviving spouse still having limited access to those assets for certain needs.

Sometimes, the way to ensure that one’s children receive the assets intended for them upon their parent’s death is to leave them to the children outside of the trust, thus pass them to the children directly by naming the children as beneficiaries on certain accounts.

Creating a separate trust, especially if the children are minors, is another way to guarantee that the assets pass to one’s children outside the control of the stepparent.

Additionally, a premarital or marital agreement entered into by the couple before or during marriage typically specifies the rights and responsibilities of each spouse during the marriage, but can also specify the children’s living situation and expenses, and require that assets be used to maintain their standard of living.

Modern blended families face unique estate planning challenges. With thoughtful and comprehensive estate planning, one can leave a financial legacy for the children while still providing for your surviving spouse.